MLM Compensation Plans

Prior to joining any MLM Company, you should have a thorough understanding of its compensation plan. You should know exactly how much you will get paid. That way, there is no confusion or misunderstandings. To take it one step further, I think you should pick a MLM Compensation Plan first, and then find a company that uses that plan.

In the paragraphs below, I’m going to take a few minutes to review the four most common types of MLM Compensation Plans. We’ll cover some of the pros and cons of each. Let’s get started:

1. Forced Matrix Plan: Forced Matrix Plans allow you to have a specific amount of people on your first level. For instance, a 5 x 7 forced matrix plan allows you to have five people on your first level. After you sponsor five people, you must place your new distributors under someone else in your downline. Each one of those distributors can have five on their first level, and so forth. In this example, you could potentially have:

• 5 on your first level

• 25 on your second level

• 125 on your third level

• 625 on your fourth level

• 3,125 on your fifth level

• 15, 625 on your sixth level

• 78,125 on your seventh level

• TOTAL 97,780 potential downline

The major advantage of this plan is that you help your downline build a downline. You help lots of people earn small commissions, even if they don’t sponsor anyone. That can have a positive effect on retention rates. When you place new distributors under someone else, they get a small check. You still get the biggest part of the commissions though.

The major disadvantage of this MLM Compensation Plan is that it breeds laziness. People expect you to put people under them. Furthermore, if you build a large organization many levels deep, you miss out on lots of money. In the above example, you wouldn’t earn one cent off people in your 8th level, 9th level and so on. And if you are real good at sponsoring people, you have better options available.

2. Binary Plan: With a Binary MLM Compensation Plan, you get to build two legs. In other words, you are limited to two people on your front level. Once you sponsor two people, you are forced to place everyone else under them in your downline. Depending upon your MLM Company, you normally get paid on your weakest leg. Market America uses the binary compensation plan.

The major advantage about this type of plan is that you get to help people. It is a very supportive environment. As you place people under other downline members, everyone benefits. The major disadvantage to this type of plan is that people often get lazy. They expect you to place people under them. In recent years, the binary compensation plan has grown in popularity.

3. Breakaway: With a breakaway plan, your successful downline distributors break away once they’ve attained a certain achievement level. Once they breakaway, their sales volume isn’t counted as part of your sales volume anymore. Instead, you get a lump bonus on a monthly or quarterly basis. This bonus equates to a certain percentage of that person’s group sales volume.

For instance, Amway uses the breakaway MLM Compensation Plan. Once your downline distributors attain the status of Platinum, they breakaway from your downline. Their sales volume no longer counts as part of your sales volume. Instead, you get a 4% monthly bonus off their volume. When you help others achieve the same success, you also get additional leadership bonuses.The major disadvantage of a breakaway is that you end up losing a large part of your downline.

In addition, you need to maintain certain achievement levels to continue to get the bonuses from your breakaway legs. If you sponsor several people who build large businesses and breakaway, you can lose lots of money. Personally, I don’t want to help someone build a large MLM business, and then have them breakaway. I want a downline that never breaks away.

4. Uni-level Matrix: With a uni-level MLM Compensation Plan you can sponsor as many people as you want on your front line. In most cases, you are limited on how many levels deep you can get paid. For instance, you might get paid 10 to 20 levels deep. If someone you sponsor builds an organization 30 to 50 levels deep, you leave a lot of money on the table. However, if you are good at sponsoring people, you can sponsor 100 or more people wide and build a large organization. Remember, width gives you profitability and depth gives you security.

Most MLM Compensation Plans pay a variety of bonuses. This includes sponsoring bonuses, leadership bonuses, retail bonuses, fast start bonuses and so forth. These bonuses are additional pay outs for people who reach certain levels of success. Your key to success is to thoroughly read the company’s compensation plan before you start building your business. That way you know how you will get paid.

In summary, all MLM Compensation Plans have pros and cons. Make sure you thoroughly understand the compensation plan, before you get started. After all, must be able to explain it to your prospects and new distributors. If it’s confusing to you, it will be confusing to others as well.

Regardless of the MLM Compensation Plan you choose, you still need to get busy building your MLM business. The MLM Company and MLM Compensation Plan are not the major factor in your success. You are. Don’t think the company you join is the solution to your problems. It’s not. If you accept that belief, you will quit your company in a few months and search for another company to join.

You will be like so many people in MLM. I call it the blind leading the blind. Your true formula for success is to find a company and MLM Company you like and stay with that company for a long period of time. That’s what most top earners do. Most successful MLM distributors have been with their current company ten or more years. If you want to make the big bucks you will need to do the same thing.

On a side note, I would love to hear from you. What is your favorite type of MLM Compensation Plan? Do you like the binary, matrix, uni-level or some other type of plan? Please share your opinions with the rest of our online community. Just fill out the web-form below, with your 150+ word testimonial. If approved, it will be available for the rest of our online community to read and comment on. Thank you.

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Market America Learn more about why Market America has achieved such great success during the past 20 years.

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